Economic news

Nordea Bank Shrugs off Pandemic as Profits Rise

HELSINKI, Oct 23 (Reuters) - Nordea Bank, the Nordic region’s biggest lender, reported a better-than-expected rise in third-quarter operating profit on Friday due to higher lending and the resilience of its loan portfolio in the coronavirus crisis.

Nordea joins Swedish rivals Handelsbanken and Swedbank in reporting low loan losses, bucking the trend of soured debt throughout the pandemic-hit global economy.

“Despite the COVID-19 pandemic, we have continuously moved in the right direction,” Nordea Chief Executive Frank Vang-Jensen told reporters, referring to progress made since the bank unveiled a turnaround plan in October last year.

Third-quarter operating profit rose to 1.09 billion euros ($1.29 billion) from a loss of 421 million a year ago, beating analysts’ mean forecast for a 966 million profit, according to Refinitiv data.

Shares in Nordea were up 4.7% at 0845 GMT.

“Although uncertainty remains, the risk of a renewed severe downturn has decreased,” Vang-Jensen said in the earnings report, adding increased economic activity was driving income growth.

The bank did not report any loan losses in the quarter, but instead a positive adjustment of 2 million euros. That compared with loan losses of 331 million euros a year earlier and analysts’ forecast for losses of 76 million euros.

Yet, Nordea reiterated its forecast for 1 billion euros of loan losses across 2020.

Net interest income, which includes income from mortgages, rose 6% to 1.14 billion euros, beating analysts’ estimate of 1.11 billion.

Nordea said it intended to pay a dividend for 2019, but was refraining from doing so for now, with the European Central Bank (ECB) currently urging banks to save cash.

“It was a strong result, both on core income and loan losses ... we can expect a positive share reaction this morning,” said Kepler Cheuvreux analyst Robin Rane.

Net fee and commission income fell 4% to 729 million euros from a year earlier, with card and payments volumes suffering from lower levels of commerce during global lockdowns.

Expenses declined to 1.1 billion euros from 2.2 billion a year earlier, as the bank’s cost savings programme and temporary savings due to the pandemic reduced spending, Nordea said.

$1 = 0.8477 euros

Reporting by Anne Kauranen in Helsinki and Colm Fulton in Stockholm; Editing by Muralikumar Anantharaman and Mark Potter

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree